World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

Tuesday, June 9, 2009

Futures are flat today, the dollar is down a little, bonds are up a little and gold is rising. Here’s the overnight /YM and /ES futures:

It has me laughing that just yesterday I read that the U.S. is asking the Europeans to “toughen up” their “stress test.” It just doesn’t get funnier than that!

Oh wait, yes it does. This morning our own Congressional Oversight Panel is asking for a “stress test” “do over” because they finally see that the unemployment rate has already risen beyond their worst case scenario, LOL.

What a joke. I like Warren, but I don’t think she realizes she’s just a player in a central banker game.

But wait, there’s more! So we’re going to let 10 of the “healthy” (Nate says still insolvent) banks repay the TARP. Remember that when they borrowed that money they had to trade toxic waste debt to the Fed in exchange for cash. Now the media is finally catching on to the fact that the banks will be buying that debt back from the Fed for LESS THAN the Fed paid for them and thus the final joke is on you and me. That is called money laundering, and yes, it was an inside job.

Let’s talk about Bonds a little. Once again, here’s the two year chart of TLT:

Note that support has now given way and the next support I see is down around the 86 or 87 area – not too much farther. That’s a key support area to watch as going beneath it would break a 30 year rising trend. I think that will happen, but it is going to take a while.

But the size and power of that collapse is larger than anything in history, it’s even larger on a percentage basis than the collapse of bonds during the Great Depression. And it happened at almost the exact same time in the sequence of events! During the depression equities collapsed and about a year and a half later bonds collapsed. Here we are. If you’re waiting for the headline that reads, “BOND MARKET COLLAPSES,” don’t hold your breath, it already has.

And I would say to those Keynesian morons who wish to stimulate to create never ending growth that the collapse of the bond market occurred precisely BECAUSE of their actions. Look at that chart… does that look like a “normalizing of interest rates” to you?

And look at this one month chart of SHY, the one to three year bond fund:

Does that look like “normalization” to you? Uh, huh.

The Keynesian fools running the world wouldn’t know a parabolic curve if one bit them in the ass. They certainly wouldn’t recognize a parabolic collapse.